Usually… Yes. However, let’s see what the IRS has to say right now on this subject. I will highlight a few points below; but, you’ll have to read the Forbes article IRS Issues Tax Guidance On Discharged Student Loans (Jan 15, 2020) for the details.
You should not report the amount of the discharged loan on your federal income tax return if you:
- Participated in Closed School discharge process.
- Participated in the Defense to Repayment discharge process.
- Participated in legal settlement discharge actions.
These are just the highlights. Make sure you read the article and it’s links, and also, talk to your Tax Professional to see if you qualify.